Revision Skis is currently on the come up.
Recently, I have noticed Revision make two moves that differentiate themselves from industry competitors.
- Alignment with the Bunch
- New line of low price skis that come with 'rail damage warranty'
I believe that these moves summarize Revision's mission and go to market plan: be a creative, rider influenced, "out-of-the-box" ski company that makes cheap skis. Find customers by attracting them to low prices and Bunch trend.
I want to hear NS's opinion on these moves, and the sustainability of revision skis as a company.
IMHO - Revision skis is currently booming, but will bust hard in a few seasons and go under. Here is why, addressing the two points above -
Alignment with the Bunch: Revision has gone to far with this. I get it, the Bunch is hot right now. However, it is a terrible business move to align yourself with a trend to the extent that Revision has. The revision team is basically The Bunch + a few other guys who now ski like the Bunch, all Revision products feature Bunch like style and artwork, and their latest media is influenced by the Bunch. It is no secret that they have become an arm of the Bunch.
You can capitalize on trends if you identify them and cater to that market at the right time, but trends die. Businesses that center themselves around a trend either die or evolve into something else once the trend is over. Revision could one day evolve, but this is unlikely as they are already in a very niche space where competition is heavy.
What happens when the Bunch trend becomes less popular to whatever the next trend will be? What happens when the Bunch stops making movies after Finess? What if the Bunch, as both a whole and as individuals, want to do something new in terms of their style and way of skiing? Revision will have to re-do their entire image; something that costs a lot money and will lose them customers, as they are still a brand new company with no history to go off of.
Low Price Skis with rail damage warranty: You can have one, but not both. I have a hard time seeing how Revision is going to make money with this strategy. It is clear that they are aiming to sell a high volume of skis at a low price. That is fine, if the margins are sustainable. However, what is not fine, is offering the warranty on top of those prices. People are going to to take advantage of the warranty . This takes away sales from your bottom line. When the goal is to sell high volume, you don't want to incentive people to not buy your stuff because they can get a free replacement if they ding the edges up with a hammer. Not everyone will do this, but some will and the business will suffer the consequences. I don't think that the business model is able to sustain the warranty, as it thrives on high volume sales. You want your customer to buy more from you if the ski brakes, not get free stuff from you.
Going back to margins, I wonder how they are for Revision skis. High volume, low price sales (commodity) usually result in low margins, which is why selling high volumes of product is so important. Unless Revision is ran extremely efficiently (asset management... aka supply & demand balance, maximized operating rates, supply chain optimization, etc.) I would guess that their margins aren't so great. This leads me to believe that A.) the materials used in their skis are low quality B.) there will be a lack of innovation in product design and performance.
The reality is that they need a profit to survive. How do they make a profit if they are selling skis for so cheap? They either 1.) use cheap materials, 2.) sell an extremely high volume of skis, or 3.) spend no money on improving the company for the future (or a combo of all three). Either way, it's not a good business model for the ski industry. 1.) People want high quality skis that wont break after half a season or lose pop, 2.) no one sells an extremely high volume of skis because the market is so condensed and niche, not even the corporate players, and 3.) you have to put back into the company so you can be ahead of the MANY trends that will always grow, die, and dominate the ski industry (Armada is one of the best at this).
I realize that I take a lot for granted, but this is what I see: I see the Revision Skis business model to be very unsustainable and I predict that they will go under in the next couple of winters if they stay on their current path.
I would love to hear your opinion on this topic NS.